美國
證券交易委員會
華盛頓特區 20549
表格
(標記一個)
根據1934年證券交易法第13或15(d)條款的季度報告。 |
截至2024年6月30日季度結束
或
根據1934年證券交易法第13或15(d)條款的過渡報告 |
到 在權利益分享區間內， .
委員會檔案編號
（依憑章程所載的完整登記名稱）
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（成立或組織的）州或其他轄區 或組織成立的州或其他司法管轄區) |
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(國稅局僱主 識別號碼) |
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（總部地址） |
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(郵遞區號) |
註冊人的電話號碼，包括區號：（
根據法案第12(b)條規定註冊的證券：
每種類別的名稱 |
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交易 標的 |
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每個註冊交易所的名稱 |
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請勾選以下選項以表示申報人（1）已提交證券交易法1934年第13條或15(d)條所要求提交的所有報告，且在過去12個月中（或申報人需要提交此類報告的較短期間）已提交；（2）已受到過去90天內此類提交要求的限制。
請通過勾選標記說明，註冊人是否在過去12個月（或註冊人被要求提交此類文件的較短期間）內電子提交了根據S-t規則405要求提交的每一個互動數據文件。
請勾選指示登記者是否為大型快速提交人、快速提交人、非快速提交人、較小的報告公司或新興成長型公司。請參閱交易所法規120億2條，了解「大型快速提交人」、「快速提交人」、「較小的報告公司」和「新興成長型公司」的定義。
☒ |
加速歸檔人 |
☐ |
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非加速申報者 |
☐ |
小型報告公司 |
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新興成長型企業 |
如果是新興成長公司，請勾選，表示申報人已選擇不使用交易所法第13(a)條提供的任何新的或修訂的財務會計準則的延長過渡期。 ☐
請在核取方框內表明公司是否為空殼公司（根據交易所法規120億2號所定義）。 是 ☐ 否
截至2024年7月26日，註冊人名下擁有2,177,417,976股普通股。
伯靈頓商店公司
指数
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頁面 |
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3 |
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3 |
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3 |
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4 |
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5 |
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6 |
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6 |
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21 |
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36 |
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36 |
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37 |
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37 |
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37 |
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37 |
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37 |
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37 |
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37 |
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38 |
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39 |
2
第一部分. 財務資訊AL資訊
項目 1. 財務財務報表
伯靈頓百貨, INC.
綜合財務報表收入報表
(未經審計)
(所有金額單位爲千, 除每股數據外)
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截至三個月 |
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截至九個月 |
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11月2日 |
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10月28日 |
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11月2日 |
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10月28日 |
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2024 |
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2023 |
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2024 |
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2023 |
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收入： |
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$ |
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$ |
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$ |
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$ |
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其他收入 |
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總營業收入 |
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成本和費用： |
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銷售成本 |
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銷售、一般和管理費用 |
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與債務修訂相關的成本 |
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— |
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折舊和攤銷 |
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長期資產減值損失 |
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其他收入 - 淨 |
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債務滅失損失 |
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利息支出 |
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總成本和費用 |
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稅前利潤 |
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所得稅費用 |
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凈利潤 |
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$ |
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$ |
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$ |
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$ |
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每股凈利潤： |
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普通股 - 基礎 |
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$ |
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$ |
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$ |
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$ |
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普通股 - 稀釋 |
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$ |
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$ |
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$ |
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$ |
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加權平均普通股數量： |
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普通股 - 基礎 |
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普通股 - 稀釋 |
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請參閱摘要合併基本報表的附註。
3
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(All amounts in thousands)
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截至三個月 |
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截至九個月 |
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11月2日 |
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10月28日 |
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11月2日 |
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10月28日 |
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2024 |
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2023 |
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2024 |
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2023 |
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凈利潤 |
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$ |
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$ |
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$ |
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$ |
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其他綜合收益，稅後： |
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利率衍生合同： |
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期內產生的未實現淨收益 |
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期內重新分類進收益的淨額 |
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( |
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其他綜合收益，扣除稅費 |
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綜合收益總額 |
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$ |
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$ |
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$ |
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$ |
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請參閱簡明合併財務報表中的說明。
4
伯靈頓百貨, INC.
合併資產負債表合併資產負債表
(未經審計)
(所有板塊金額以千爲單位，除了股份和每股數據)
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11月2日 |
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2月3日， |
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10月28日 |
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2024 |
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2024 |
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2023 |
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資產 |
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流動資產： |
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現金及現金等價物 |
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$ |
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$ |
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$ |
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應收賬款—淨額 |
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商品存貨 |
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待處置資產 |
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預付賬款及其他流動資產 |
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總流動資產 |
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物業及設備——淨值 |
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經營租賃資產 |
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商標 |
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商譽 |
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遞延稅款資產 |
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其他資產 |
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總資產 |
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$ |
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$ |
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$ |
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負債及股東權益 |
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流動負債： |
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應付賬款 |
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$ |
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$ |
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$ |
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當前運營租賃負債 |
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其他流動負債 |
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長期債務的當前到期 |
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總流動負債 |
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長期債務 |
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長期經營租賃負債 |
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其他負債 |
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遞延稅項負債 |
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（註釋11） |
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股東權益： |
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優先股，$ |
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普通股，$ |
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授權： |
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已發行： |
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流通在外： |
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新增已實收資本 |
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累計收益 |
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累計其他綜合收益 |
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庫存股票，按成本 |
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股東權益總額 |
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總負債和股東權益 |
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$ |
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$ |
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$ |
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請參閱簡明合併財務報表中的說明。
5
伯靈頓百貨有限公司
濃縮合並的現金流量表
（未經審計）
(所有板塊金額以千計)
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截至九個月 |
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11月2日， |
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十月二十八日， |
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2024 |
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2023 |
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經營活動 |
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淨利潤 |
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$ |
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$ |
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調整以將淨利潤調整爲經營活動提供的現金 |
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折舊和攤銷 |
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減值費用—長期資產 |
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遞延融資費用的攤銷 |
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長期債務工具的增值 |
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遞延所得稅 |
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債務註銷損失 |
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非現金股票補償費用 |
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非現金租賃費用 |
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( |
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從房東津貼中收到的現金 |
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資產和負債的變動： |
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應收賬款 |
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( |
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( |
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商品庫存 |
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( |
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( |
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預付及其他流動資產 |
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( |
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( |
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應付賬款 |
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( |
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其他流動負債 |
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( |
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其他長期資產和長期負債 |
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其他營運活動 |
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經營活動提供的淨現金 |
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投資活動 |
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用於購買不動產和設備的現金 |
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( |
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( |
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租賃獲取成本 |
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( |
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出售不動產和設備及待售資產的淨收入 |
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投資活動使用的淨現金 |
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融資活動 |
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長期債務收益——定期貸款設施 |
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— |
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長期債務的本金償還——定期貸款設施 |
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( |
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( |
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長期債務的收入——2027年可轉換債券 |
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— |
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長期債務的本金償還——2025年可轉換債券 |
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— |
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( |
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購買庫藏股 |
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( |
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( |
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股票期權行使的收益 |
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50,000 |
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融資活動提供的（使用的）淨現金 |
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( |
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現金及現金等價物減少 |
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( |
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( |
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期初的現金及現金等價物 |
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期末的現金及現金等價物 |
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$ |
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$ |
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現金流信息的補充披露： |
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支付的利息 |
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$ |
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$ |
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所得稅支付 - 淨額 |
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$ |
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$ |
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非現金投資和融資活動： |
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融資租賃修改 |
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$ |
( |
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$ |
— |
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應計的物業和設備採購 |
|
$ |
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$ |
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請參閱摘要合併基本報表的附註。
伯靈頓百貨有限公司
已壓縮合並基本報表的說明
2024年11月2日
（未經審計）
1. 重要會計政策摘要
財務報表基礎
截至2024年11月2日，伯靈頓百貨公司（連同其子公司統稱爲「公司」）通過其間接子公司伯靈頓外套工廠倉儲公司（BCFWC）運營
6
這些未經審計的簡明合併基本報表包括伯靈頓百貨股份有限公司及其子公司的帳目。所有內部公司帳戶和交易在合併中已被消除。簡明合併基本報表未經審計，但在管理層看來，反映了所有調整（屬於正常和經常性）以便公平展現所呈現的臨時期間的經營結果。某些信息和註釋披露通常包括在根據美國公認會計原則（GAAP）編制的基本報表中已被簡化或省略。這些簡明合併基本報表應與公司財務年度截至2024年2月3日（2023財年10-K）中包含的經審計的合併基本報表及其附註結合閱讀。2024年2月3日的資產負債表來自於2023財年10-K中包含的經審計的合併基本報表。由於公司的業務具有季節性特點，2024年11月2日止的三個月和九個月的經營結果不一定能代表財年的結果。
公司遵循的會計政策在2023財年10-K的第二部分，第8項「重要會計政策摘要」中描述。
財政年度
公司將其財年定義爲截至最近一個1月31日的星期六的52或53週期。2024財年定義爲截至2025年2月1日的52周，2023財年定義爲截至2024年2月3日的53周。2024財年和2023財年的第一、第二及第三季度各由13周組成。
最近採用的會計準則
在截至2024年11月2日的三個月和九個月期間，沒有新的會計標準對公司的簡明合併基本報表及其附註產生重大影響。
在2023年11月，財務會計準則委員會發布了ASU 2023-07，"部門報告（話題280）：可報告部門披露的改進"（ASU 2023-07），旨在通過增強關於重大部門費用的披露來改善可報告部門的披露要求。該標準適用於2023年12月15日後開始的年度報告期，以及2024年12月15日後開始的中期報告期。公司目前正在評估ASU 2023-07對其合併基本報表披露的影響。
在 在2023年12月，財務會計準則委員會發布了ASU 2023-09，"所得稅（話題740）：所得稅披露的改進"（ASU 2023-09），旨在擴展有關所得稅的披露要求，特別是與稅率調整和已支付的所得稅相關。ASU 2023-09適用於2024年12月15日後開始的年度報告期，允許提前採用。
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可以 可以適用於前瞻性或追溯性。公司正在評估ASU 2023-09對其合併基本報表披露的影響。
2. 股東權益
關於 截至2024年11月2日和2023年10月28日的三個月和九個月期間，公司股東權益的活動總結如下：
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作爲公開宣佈計劃的一部分購買的股票，包括$ |
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限制性股票的歸屬 |
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股票基礎補償 |
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未實現的利率衍生合約收益，扣除相關稅費$ |
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從累計其他綜合收益重分類到收益的金額，扣除相關稅費$ |
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截至2024年5月4日的餘額 |
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行使的股票期權 |
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用於稅收扣繳的股份 |
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作爲公開宣佈計劃的一部分購買的股份，包含$ |
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限制性股份的歸屬 |
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股票基礎補償 |
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利率衍生合同上的未實現損失，扣除相關稅項後的金額爲$ |
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從累計其他綜合收益中重分類至收益的金額，扣除相關稅項後的金額爲$ |
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截至2024年8月3日的餘額 |
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行使的股票期權 |
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用於稅款扣繳的股份 |
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作爲公開宣佈計劃的一部分購買的股份，包括$ |
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限制性股票的歸屬 |
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利率衍生合約的未實現收益，扣除相關稅款$ |
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從累計其他綜合收益重分類爲收益的金額，扣除相關稅款$ |
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截至2024年11月2日的餘額 |
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(以千爲單位，除分享數據外) |
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普通股 |
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累計 |
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累計 |
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Shares |
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收入 |
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Shares |
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金額 |
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總計 |
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截至2023年1月28日的餘額 |
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行使的股票期權 |
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用於稅款扣繳的股份 |
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根據公開宣佈的計劃購買的股份，包含$ |
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利率衍生合同的未實現收益，扣除相關稅費 $ |
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從累計其他綜合收益中重分類爲收益的金額，扣除相關稅費 $ |
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截至2023年4月29日的餘額 |
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行使的股票期權 |
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用於稅收扣除的股份 |
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作爲公開宣佈計劃的一部分購買的股份，包括$ |
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受限制股份的歸屬 |
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股票基礎補償 |
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未實現的利率衍生合約收益，扣除相關稅費$ |
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從累計其他綜合收入重分類到收益的金額，扣除相關稅費$ |
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截至2023年7月29日的餘額 |
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行使的股票期權 |
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用於稅款扣繳的分享 |
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作爲公開宣佈計劃的一部分購買的分享，包括$ |
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限制性分享的歸屬 |
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股票基礎補償 |
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— |
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— |
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— |
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— |
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— |
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— |
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利率衍生合同的未實現收益，扣除相關稅費$ |
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— |
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— |
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— |
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— |
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— |
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— |
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從累計其他綜合收益重分類到收益的金額，扣除相關稅費$ |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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截至2023年10月28日的餘額 |
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$ |
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$ |
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$ |
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$ |
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( |
) |
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$ |
( |
) |
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$ |
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||||||
3. 租賃承諾
公司的租賃主要包括商店、配送中心和辦公室空間，屬於運營租賃和融資租賃，將主要在接下來的
9
以下是公司未來租賃支付的時間表：
|
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(以千爲單位) |
|
|||||
財政年度 |
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經營 |
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融資 |
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2024年（剩餘部分） |
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$ |
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$ |
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2025 |
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2026 |
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2027 |
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2028 |
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此後 |
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未來最低租賃支付總額 |
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代表利息的金額 |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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$ |
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$ |
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加權平均折現率 |
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加權平均剩餘租賃期限（年） |
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||||
上述計劃不包括大約$
公司已與位於喬治亞州Ellabell的新配送中心簽訂租賃協議，預計將於2025年春季開始。公司在施工期間不對該資產進行控制，但參與相關資產的設計和施工。此外，租賃協議中有購買選項，可以在以下任一事件發生後行使：(a) 施工實質完成或 (b) 公司開始在該場所開展業務的日期。
以下是所示期間的淨租賃成本計劃：
|
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(以千爲單位) |
|
|||||||||||||
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三個月結束 |
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截至九個月 |
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||||||||||
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2024年11月2日 |
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2023年10月28日 |
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2024年11月2日 |
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2023年10月28日 |
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||||
融資租賃成本： |
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融資租賃資產的攤銷 (a) |
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$ |
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$ |
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$ |
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$ |
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||||
租賃負債的利息 (b) |
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經營租賃成本 (c) |
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變動租賃成本 (c) |
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租賃總成本 |
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出售與售後回租交易的減值（收益）(d) |
|
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— |
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— |
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( |
) |
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減去所有租金收入 (e) |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
總淨租金費用 (f) |
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$ |
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$ |
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$ |
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$ |
|
||||
10
與租賃有關的補充現金流披露如下：
|
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(以千爲單位) |
|
|||||
|
|
截至九個月 |
|
|||||
|
|
2024年11月2日 |
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2023年10月28日 |
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||
用於計量租賃負債的現金支付： |
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||
因經營租賃負債產生的現金支付 (a) |
|
$ |
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$ |
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||
融資租賃負債的本金部分的現金支付 (b) |
|
$ |
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$ |
|
||
融資租賃負債利息部分的現金支付（a） |
|
$ |
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$ |
|
||
補充非現金信息： |
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|
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|
||
因獲得使用權資產而產生的經營租賃負債 |
|
$ |
|
|
$ |
|
||
4. 開多期債務
開多期債務包括:
|
|
(以千爲單位) |
|
|||||||||
|
|
11月2日， |
|
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二月三日, |
|
|
十月二十八日， |
|
|||
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2024 |
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2024 |
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2023 |
|
|||
高級擔保定期貸款，調整後的SOFR（下限爲 |
|
$ |
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|
$ |
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|
$ |
|
|||
可轉換高級票據， |
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可轉換高級票據， |
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|
|||
ABL高級擔保循環貸款，基於平均未償餘額的SOFR加上利差，期限到期於 |
|
|
— |
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|
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— |
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— |
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|
||||
尚未攤銷的遞延融資費用 |
|
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( |
) |
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( |
) |
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( |
) |
總債務 |
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|
|||
減：流動到期部分 |
|
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( |
) |
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( |
) |
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( |
) |
開多期債務，減去當前到期的部分 |
|
$ |
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|
$ |
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|
$ |
|
|||
定期貸款設施
BCFWC及其某些子公司和控股公司是貸款協議的當事方（經過修訂、補充和其他修改的貸款設施），該協議規定截至2024年11月2日的貸款總額爲上千萬美元 爲$
2024年9月24日，公司簽署了對2011年2月24日生效的貸款設施的修正案（"修正案"），其中包括（i）將未償還的$
定期貸款設施以BCFWC以及每個擔保人的股權、設備、知識產權、某些優惠租約和房地產業，以及某些相關資產和其收益（受某些例外情況的限制）爲第一擔保；同時對BCFWC及每個擔保人的其他資產和其收益（受某些例外情況的限制）享有第二擔保權。
截至2024年11月2日和2023年10月28日，與定期貸款設施相關的利率爲
2025可轉換債券
在2020年4月16日，公司發行了其
11
在2023財政年度的第一季度，公司與部分2025年可轉換票據的持有人簽署了單獨的私下協議。根據交換協議的條款，持有人用他們持有的2025年可轉換票據交換了$
在2025年1月15日之前的最後一個工作日結束之前，2025年可轉換票據將僅在某些事件發生以及在特定期間內可由持有人選擇轉換。此後，2025年可轉換票據將在到期日前的第二個預定交易日結束之前的任何時間由持有人選擇轉換。2025年可轉換票據的初始轉股比率爲
2025年可轉換票據的持有人可能會要求公司在發生構成基本變化的某些事件時，以等於
2027年可轉換票據
在2023年9月12日，公司完成了約 $ 的發行
2027年可轉債將按年利率
在2027年9月15日之前的工作日結束前，2027年可轉債僅在特定事件發生和特定時期內可以由持有人選擇轉換。此後，持有人可以在到期日前的第二個交易日結束前的任何時間選擇轉換2027年可轉債。2027年可轉債的初始轉換比率爲
12
如果公司發生重大變更，符合特定條件的情況下，2027年可轉換債券的持有人可以要求公司以現金回購全部或部分2027年新可轉換債券。重大變更回購價格爲
ABL信貸額度
BCFWC及其某些子公司和控股公司是第二次修訂和重述信貸協議（經修訂、補充和其他修改，ABL信貸額度）的當事方，該協議提供了$
2023年6月26日，BCFWC簽署了第二次修訂和重述的信貸協議的第五修訂，增加了其中信用信函的子限額，從$
截至2024年11月2日，公司在ABL信用額度下有$
截至2023年10月28日，公司在ABL信用額度下有$
5. 衍生工具和對沖活動
公司按照ASC 815 "衍生工具和對沖"（ASC 815）對衍生工具和對沖活動進行會計處理。根據ASC 815的要求，公司在資產負債表上以公允價值記錄所有衍生工具，並每季度調整至市場價值。此外，爲了遵守ASC 820 "公允價值計量"（ASC 820）的規定，公司在公允價值中包含考慮到合同的任何信用增益所產生的信用估值調整，以反映潛在的未履行風險。在調整衍生合同的公允價值以反映未履行風險時，公司考慮了任何適用的信用增益，例如抵押品、門檻、互相條件和擔保。根據ASC 820，公司選擇了一種會計政策，以根據對手方投資組合對其受主協議淨額協議約束的衍生金融工具進行淨值計量。因爲公司只有
2021年6月24日，公司簽訂了一份利率互換協議，對$
2024年9月27日，公司終止了之前的$
利率風險的現金流對沖
公司的目標是通過使用利率衍生品來增加利息支出的穩定性，並管理其對利率波動的風險。爲了實現這些目標，公司主要使用利率互換作爲其利率風險管理策略的一部分。被指定爲現金流 Hedge 的利率互換涉及從一個變量
13
對方在交易所爲公司在協議期間進行固定利率支付，而不交換基礎名義金額。
截至 截至2024年11月2日，公司有以下未結利率衍生工具，這些工具被指定爲利率風險的現金流對沖。
利率衍生工具 |
|
數量 |
|
名義總額 |
|
利息掉期利率 |
|
到期日 |
利率掉期合同 |
|
|
$ |
|
|
表格披露
下表展示了公司衍生金融工具的公允價值，按總額及其在公司縮編合併資產負債表中的分類：
|
|
(以千爲單位) |
|
|||||||||||||||
|
|
衍生工具的公允價值 |
|
|||||||||||||||
|
|
2024年11月2日 |
|
|
2024年2月3日 |
|
|
2023年10月28日 |
|
|||||||||
指定爲對沖工具的衍生品 |
|
餘額 |
|
公允價值 |
|
|
餘額 |
|
公允價值 |
|
|
餘額 |
|
公允價值 |
|
|||
利率互換合同 |
|
其他資產 |
|
$ |
|
|
其他資產 |
|
$ |
|
|
其他資產 |
|
$ |
|
|||
下表展示了因公司的衍生金融工具而遞延至其他綜合收益的未實現收益和損失，涵蓋每個報告期。
|
|
(以千爲單位) |
|
|||||||||||||
|
|
三個月結束 |
|
|
截至九個月 |
|
||||||||||
利率衍生產品： |
|
2024年11月2日 |
|
|
2023年10月28日 |
|
|
2024年11月2日 |
|
|
2023年10月28日 |
|
||||
未實現收益，稅前 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
所得稅收益 |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
未實現收益，稅後 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
下表列出了與公司衍生工具相關的將其他綜合收益中的損益重分類爲收益的信息，適用於各個報告期。
|
|
(以千爲單位) |
|
|||||||||||||
|
|
三個月結束 |
|
|
截至九個月 |
|
||||||||||
收益的組成部分： |
|
2024年11月2日 |
|
|
2023年10月28日 |
|
|
2024年11月2日 |
|
|
2023年10月28日 |
|
||||
利息收益 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
所得稅費用 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
淨重分類爲收益 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
公司估計，約有 $
6. 公允價值計量
公司根據ASC 820進行公允價值計量，該標準定義了公允價值，建立了計量框架並擴展了有關公允價值計量的披露。ASC 820將公允價值定義爲在計量日期市場參與者之間有序交易中出售資產的價格或轉移負債的價格（退出價格），並將用於測量公允價值的輸入分類爲以下層級：
第1級： 活躍市場中相同資產或負債的報價價格。
第2級： 活躍市場中相似資產或負債的報價市場價格；不活躍市場中相同或相似資產或負債的報價價格；以及輸入可觀測或主要價值驅動因素可觀測的模型推導估值。
14
第三級： 對資產和負債的定價輸入是不可觀察的，包括幾乎沒有市場活動的資產和負債的情況。
公允價值的確定需要管理層的重大判斷或估計。
現金等價物、應收賬款和應付賬款的賬面金額因這些工具的短期性質而接近公允價值。
有關公司利率掉期合同公允價值的進一步討論，請參閱第5條，"衍生工具和對沖活動"。
金融資產
截至，公司的金融資產的公允價值以及輸入水平的層次結構 2024年11月2日、2024年2月3日和2023年10月28日的彙總如下：
|
|
(以千爲單位) |
|
|||||||||
|
|
公允價值計量於 |
|
|||||||||
|
|
11月2日， |
|
|
二月三日, |
|
|
十月二十八日， |
|
|||
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|||
第一級 |
|
|
|
|
|
|
|
|
|
|||
現金等價物 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
長期資產的公允價值是基於ASC 820的公允價值層級進行非經常性計量的，目的是計算減值。公司的長期資產的公允價值是通過使用三級輸入的折現現金流模型計算的。在計算未來現金流時，公司根據其經驗和對零售地點所在市場因素的了解，對未來經營結果和市場租金率進行估計。
長期資產的減值費用爲$
長期資產的減值費用爲$
金融負債
公司的金融負債的公允價值總結如下：
|
|
(以千爲單位) |
|
|||||||||||||||||||||
|
|
2024年11月2日 |
|
|
2024年2月3日 |
|
|
2023年10月28日 |
|
|||||||||||||||
|
|
本金 |
|
|
公允價值 |
|
|
本金 |
|
|
公允價值 |
|
|
本金 |
|
|
公允價值 |
|
||||||
定期貸款設施 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
2025年可轉換債券 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2027年可轉換債券 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ABL信貸額度(a) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
總債務(b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
這裏所呈現的公允價值基於管理層在各個期末日期可獲得的相關信息。公司債務的估計公允價值被分類爲公允價值層次結構中的第2級，並基於從非活躍市場收到的當前市場報價。
15
7. 所得稅
所得稅費用爲 $
所得稅費用爲 $
淨遞延稅款如下：
|
|
(以千爲單位) |
|
|||||||||
|
|
11月2日， |
|
|
二月三日, |
|
|
十月二十八日， |
|
|||
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|||
遞延稅資產 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
遞延所得稅負債 |
|
|
|
|
|
|
|
|
|
|||
淨遞延稅務負債 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
淨遞延所得稅資產與波多黎各的遞延餘額有關，這些餘額在稅務上將帶來未來的淨收益。淨遞延所得稅負債主要與無形資產和折舊費用有關，公司的稅務上將承擔未來的義務。
截至2024年11月2日，公司有一項與淨營業虧損相關的遞延所得稅資產，金額爲$
截至2024年11月2日公司有相關稅收抵免遞延稅資產$
截至2024年11月2日、2024年2月3日和2023年10月28日，估值備抵總額爲$
8. 股本
庫存股
公司按照成本法對庫存股進行會計處理。
用於滿足稅務扣繳的股份
截至2024年11月2日的九個月期間，公司收購了
股份回購計劃
在2023年8月15日，公司的董事會授權回購最多$
16
截至2024年11月2日的九個月期間，公司回購了
9. 每股淨利潤
基本每股淨利潤是通過將淨利潤除以流通在外的加權平均普通股股數來計算的。稀釋每股淨利潤是通過將淨利潤除以在使用公司股權期權、限制性股票和限制性股票單位獎勵期間流通在外的加權平均普通股和潛在稀釋證券的數量來計算的，採用國庫股法和可轉換債券的如果轉換法。
|
|
(以千爲單位，除每股數據外) |
|
|||||||||||||
|
|
三個月結束 |
|
|
截至九個月 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
11月2日， |
|
|
十月二十八日， |
|
|
11月2日， |
|
|
十月二十八日， |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
基本每股淨利潤 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
淨利潤 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
加權平均普通股股份數——基本 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
每股淨利潤——基本 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
攤薄每股淨利潤 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
淨利潤 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
基本和稀釋淨利潤每股分享： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
普通股的加權平均數量 - 基本 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
假設行使期權和限制性股票的歸屬 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
假設可轉換債務的轉換 |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
普通股的加權平均數量 - 稀釋 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
每普通股淨利潤 - 稀釋 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
大約
大約
10. 基於股票的補償
截至2024年11月2日，還有
非現金股票補償費用如下：
|
|
(以千爲單位) |
|
|||||||||||||
|
|
三個月結束 |
|
|
截至九個月 |
|
||||||||||
|
|
11月2日， |
|
|
十月二十八日， |
|
|
11月2日， |
|
|
十月二十八日， |
|
||||
非現金股票補償類型 |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
限制性股票單位授予 (a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
股票期權授予 (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
績效股票單位授予 (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
總計 (b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
17
期權
截至2024年11月2日的九個月期間的期權交易如下： 期權交易總結如下：
|
|
數量 |
|
|
加權 |
|
||
期權未平倉，2024年2月3日 |
|
|
|
|
$ |
|
||
授予的期權 |
|
|
|
|
|
|
||
已行使期權(a) |
|
|
( |
) |
|
|
|
|
期權被放棄 |
|
|
( |
) |
|
|
|
|
期權未平倉，2024年11月2日 |
|
|
|
|
|
|
||
以下表格總結了截至的期權歸屬和預期歸屬的信息 2024年11月2日：
|
|
期權 |
|
|
加權 |
|
|
加權 |
|
|
彙總 |
|
||||
已歸屬和預計將歸屬的期權 |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
可行使的期權 |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
在期間內授予的每個股票期權的公允價值 截至2024年11月2日的九個月期間，使用以下假設的加權平均基礎，通過布萊克-肖爾斯期權定價模型估算每個授予的股票期權的公允價值:
|
|
|
截至九個月 |
|
|
|
11月2日， |
|
|
|
2024 |
無風險利率 |
|
|
|
預期波動率 |
|
|
|
預期壽命（年） |
|
|
|
合同期限（年） |
|
|
|
預期股息收益率 |
|
|
|
授予日期發行的期權的公允價值 |
|
$ |
預期的分紅派息收益率是基於公司對近期不支付分紅派息的預期。爲了評估其波動因素，公司使用其股票價格在期權預期生命週期內的歷史波動率。無風險利率是基於美國國債的利率，考慮了與所估值獎勵的預期期限相似的美國國債零息債券的到期時間。期權的預期生命週期是通過歷史行使率來估算的。
18
限制性股票單位
限制性股票單位交易在 截至2024年11月2日的九個月期間 總結如下：
|
|
數量 |
|
|
加權 |
|
||
截至2024年2月3日待歸屬的獎勵 |
|
|
|
|
$ |
|
||
授予的獎勵 |
|
|
|
|
|
|
||
歸屬的獎勵(a) |
|
|
( |
) |
|
|
|
|
被放棄的獎勵 |
|
|
( |
) |
|
|
|
|
截至2024年11月2日待歸屬的獎勵 |
|
|
|
|
|
|
||
在截至2024年11月2日的九個月期間授予的每一股限制性股票的公允價值基於授予日公司普通股的收盤價。
績效股票單位
公司向其高級管理人員授予基於業績的限制性股票單位。2021財年授予的業績股票單位的歸屬基於持續服務以及實現預先設定的調整後息稅前利潤率擴張和銷售複合年增長率（CAGR）目標（每個權重相等）的成果。
在 截至2024年11月2日的九個月期間，業績股票單位交易彙總如下：
|
|
數量 |
|
|
加權 |
|
||
截至2024年2月3日，未歸屬獎勵總數 |
|
|
|
|
$ |
|
||
授予的獎勵 |
|
|
|
|
|
|
||
已歸屬的獎勵（a） |
|
|
( |
) |
|
|
|
|
被取消的獎勵 |
|
|
( |
) |
|
|
|
|
截至2024年11月2日，未歸屬獎勵總數 |
|
|
|
|
|
|
||
11. 承諾和或有事項
法律
在業務過程中，公司涉及到指控違反聯邦和州工資與工時及其他勞動法的集體訴訟、依據加利福尼亞州私人檢察官法的代表性索賠，以及不時發生的其他各種訴訟和監管程序，包括商業、產品、員工、客戶、知識產權及其他索賠。針對我們的訴訟處於不同的程序階段。這些程序中的許多都涉及事實和法律問題，並且存在不確定性。儘管無法保證這些事務的最終結果，但公司認爲這些行動的最終解決不會對公司的運營結果、財務狀況、流動性或資本資源產生重大不利影響。
19
信用證
公司與多家銀行有信用證安排，總金額爲$
採購承諾
公司有$
20
BURLINGTON STORES, INC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report and the Consolidated Financial Statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (Fiscal 2023 10-K).
In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions. Our actual results or other events may differ materially from those anticipated in these forward-looking statements due to various factors, including those discussed under the section of this Item 2 entitled “Safe Harbor Statement.”
Executive Summary
Introduction
We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 1,103 stores as of November 2, 2024 in 46 states, Washington D.C. and Puerto Rico. We have diversified our product categories by offering an extensive selection of in-season, fashion-focused merchandise at up to 60% off other retailers’ prices, including: women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. We sell a broad selection of desirable, first-quality, current-brand, labeled merchandise acquired directly from nationally-recognized manufacturers and other suppliers.
Fiscal Year
Fiscal 2024 is defined as the 52-week year ended February 1, 2025. Fiscal 2023 is defined as the 53-week year ending February 3, 2024. The first, second, and third quarters of Fiscal 2024 and Fiscal 2023 each consist of 13 weeks.
Store Openings, Closings, and Relocations
During the nine month period ended November 2, 2024, we opened 139 new stores, inclusive of 30 relocations, and permanently closed 13 stores, exclusive of the aforementioned relocations, bringing our store count as of November 2, 2024 to 1,103 stores.
Ongoing Initiatives
We continue to focus on a number of ongoing initiatives aimed at increasing our overall profitability. These initiatives include, but are not limited to:
We strive to increase comparable store sales through the following initiatives:
21
We intend to expand and enhance our retail store base through the following initiatives:
We intend to increase our operating margins through the following initiatives:
Uncertainties and Challenges
As we strive to increase profitability, there are uncertainties and challenges that we face that could have a material impact on our revenues or income. Some of these uncertainties and challenges are summarized below. For a further discussion, please refer to the description under the heading “Risk Factors” in the Fiscal 2023 10-K.
General Economic Conditions. There remains a high level of uncertainty in the current macroeconomic and geopolitical environments, and prolonged inflationary pressures continue to negatively impact the discretionary spending of the low-income shopper, our core customer. In addition to inflation, consumer spending habits, including spending for the merchandise that we sell, are affected by, among other things, prevailing global economic conditions, the costs of basic necessities and other goods, levels of employment, salaries and wage rates, prevailing interest rates, reductions in government benefits and lower tax refunds, housing costs, energy costs, commodities pricing, income tax rates and policies, consumer confidence and consumer perception of economic conditions. In addition, consumer purchasing patterns are generally influenced by consumers’ disposable income, credit availability and debt levels.
22
A broad, protracted slowdown or downturn in the U.S. economy, an extended period of high unemployment or inflation rates, an uncertain domestic or global economic outlook or a financial crisis could adversely affect consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis. Conversely, if inflation continues to decline, it could benefit our core customers who have been impacted by the higher cost of living since early 2022, and if economic growth slows, it could cause moderate and higher-income shoppers to become more value conscious. Both of these developments, if they occur, would be expected to improve our business. Consumer confidence is also affected by the domestic and international political situation. Our financial condition and operations could be impacted by changes in government regulations in areas including, but not limited to, trade and tariffs, taxes and healthcare. In addition, trade and tariff regulations could have an indirect impact on consumer prices. The outbreak or escalation of war, or the occurrence of terrorist acts or other hostilities in or affecting the U.S., or public health issues such as pandemics or epidemics, could lead to a decrease in spending by consumers. In addition, natural disasters, public health issues, industrial accidents and acts of war or conflicts in various parts of the world (such as the conflict in Ukraine or the Hamas-Israel war), could have the effect of disrupting supplies and raising prices globally which, in turn, may have adverse effects on the world and U.S. economies and lead to a downturn in consumer confidence and spending.
We closely monitor our net sales, gross margin and expenses. We have performed scenario planning such that if our net sales decline for an extended period of time, we have identified variable costs that could be reduced to partially mitigate the impact of these declines. If we were to experience adverse sales trends and if our efforts to counteract the impacts of these trends are not sufficiently effective, there could be a negative impact on our financial performance and position in future fiscal periods.
Seasonality of Sales and Weather Conditions. Our business, like that of most retailers, is subject to seasonal influences. In the second half of the year, which includes the back-to-school and holiday seasons, we generally realize a higher level of sales and net income.
Weather continues to be a contributing factor to the sale of our merchandise. Generally, our sales are higher if the weather is cold during the Fall and warm during the early Spring. Sales of cold weather clothing are generally increased by early cold weather during the Fall, while sales of warm weather clothing are generally increased by early warm weather conditions in the Spring. Although we have diversified our product offerings, we believe traffic to our stores is still driven, in part, by weather patterns.
Competition and Margin Pressure. We believe that in order to remain competitive with retailers, including off-price retailers and discount stores, we must continue to offer brand-name merchandise at a discount to prices offered by other retailers as well as an assortment of merchandise that is appealing to our customers.
The U.S. retail apparel and home furnishings markets are highly fragmented and competitive. We compete for business with department stores, off-price retailers, internet retailers, specialty stores, discount stores, wholesale clubs, and outlet stores as well as with certain traditional, full-price retail chains that have developed off-price concepts. At various times throughout the year, traditional full-price department store chains and specialty shops offer brand-name merchandise at substantial markdowns, which can result in prices approximating those offered by us at our Burlington Stores. We anticipate that competition will increase in the future. Therefore, we will continue to look for ways to differentiate our stores from those of our competitors.
The U.S. retail industry continues to face increased pressure on margins as overall challenging retail conditions have led consumers to be more value conscious. Additionally, lower-to-moderate income shoppers continue to face economic pressure due to higher cost of living. Our strategy to chase the sales trend allows us the flexibility to purchase less pre-season merchandise with the balance purchased in-season and opportunistically. It also provides us with the flexibility to shift purchases between suppliers and categories. We believe that this enables us to obtain better terms with our suppliers, which we expect will help offset any rising costs of goods.
We have previously experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods, as well as in occupancy and other operating costs. There can be no assurance that we will be able to offset inflationary pressure in the future by increasing prices or through other means, or that our business will not be negatively affected by continued inflation in the future.
Key Performance and Non-GAAP Measures
We consider numerous factors in assessing our performance. Key performance and non-GAAP measures used by management include net income, Adjusted Net Income, Adjusted EBITDA, Adjusted EBIT, comparable store sales, gross margin, inventory, and liquidity.
Net income. We earned net income of $90.6 million during the three month period ended November 2, 2024 compared with net income of $48.6 million during the three month period ended October 28, 2023. We earned net income of $242.9 million during the
23
nine month period ended November 2, 2024 compared with a net income of $112.2 million during the nine month period ended October 28, 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
Adjusted Net Income, Adjusted EBITDA and Adjusted EBIT: Adjusted Net Income, Adjusted EBITDA and Adjusted EBIT are non-GAAP financial measures of our performance.
We define Adjusted Net Income as net income, exclusive of the following items, if applicable: (i) net favorable lease costs; (ii) loss on extinguishment of debt; (iii) costs related to debt amendments; (iv) impairment charges; (v) amounts related to certain litigation matters; and (vi) other unusual, non-recurring or extraordinary expenses, losses, charges or gains, all of which are tax effected to arrive at Adjusted Net Income.
We define Adjusted EBITDA as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) costs related to debt amendments; (v) income tax expense; (vi) depreciation and amortization; (vii) net favorable lease costs; (viii) impairment charges; (ix) amounts related to certain litigation matters; and (x) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
We define Adjusted EBIT as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) costs related to debt amendments; (v) income tax expense; (vi) impairment charges; (vii) net favorable lease costs; (viii) amounts related to certain litigation matters; and (ix) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
We present Adjusted Net Income, Adjusted EBITDA and Adjusted EBIT because we believe they are useful supplemental measures in evaluating the performance of our business and provide greater transparency into our results of operations. In particular, we believe that excluding certain items that may vary substantially in frequency and magnitude from what we consider to be our core operating results are useful supplemental measures that assist investors and management in evaluating our ability to generate earnings and leverage sales, and to more readily compare core operating results between past and future periods.
We believe that these non-GAAP measures provide investors helpful information with respect to our operations and financial condition. Other companies in the retail industry may calculate these non-GAAP measures differently such that our calculation may not be directly comparable.
Adjusted Net Income has limitations as an analytical tool, and should not be considered either in isolation or as a substitute for net income or other data prepared in accordance with GAAP. Among other limitations, Adjusted Net Income does not reflect the following items, net of their tax effect:
During the three and nine months ended November 2, 2024, Adjusted Net Income increased $36.1 million to $99.9 million and increased $106.5 million to $264.2 million, respectively, compared to the same periods in the prior year. These increases were primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
24
The following table shows our reconciliation of net income to Adjusted Net Income for the three and nine months ended November 2, 2024 compared with the three and nine months ended October 28, 2023:
|
|
|
|
|||||||||||||
|
|
(in thousands) |
|
|||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, |
|
|
October 28, |
|
|
November 2, |
|
|
October 28, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Reconciliation of net income to Adjusted Net Income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
90,597 |
|
|
$ |
48,551 |
|
|
$ |
242,871 |
|
|
$ |
112,191 |
|
Net favorable lease costs (a) |
|
|
2,851 |
|
|
|
3,788 |
|
|
|
8,959 |
|
|
|
11,830 |
|
Loss on extinguishment of debt (b) |
|
|
1,412 |
|
|
|
13,630 |
|
|
|
1,412 |
|
|
|
38,274 |
|
Costs related to debt amendments (c) |
|
|
4,553 |
|
|
|
— |
|
|
|
4,553 |
|
|
|
97 |
|
Impairment charges - long-lived assets |
|
|
3,044 |
|
|
|
814 |
|
|
|
11,254 |
|
|
|
6,367 |
|
Litigation matters (d) |
|
|
600 |
|
|
|
— |
|
|
|
2,525 |
|
|
|
1,500 |
|
Tax effect (e) |
|
|
(3,162 |
) |
|
|
(2,955 |
) |
|
|
(7,379 |
) |
|
|
(12,561 |
) |
Adjusted Net Income |
|
$ |
99,895 |
|
|
$ |
63,828 |
|
|
$ |
264,195 |
|
|
$ |
157,698 |
|
Adjusted EBIT and Adjusted EBITDA have limitations as analytical tools, and should not be considered either in isolation or as a substitute for net income or other data prepared in accordance with GAAP. Among other limitations, Adjusted EBIT does not reflect:
Adjusted EBITDA is further adjusted for depreciation and amortization. Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will likely have to be replaced in the future.
During the three and nine months ended November 2, 2024, Adjusted EBIT increased $41.8 million to $141.3 million and increased $132.0 million to $385.9 million, respectively, compared to the same periods in the prior year. During the three and nine months ended November 2, 2024, Adjusted EBITDA increased $53.2 million to $228.8 million and increased $168.3 million to $642.0 million, respectively, compared to the same periods in the prior year. These increases were primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
25
The following table shows our reconciliation of net income to Adjusted EBIT and Adjusted EBITDA for the three and nine months ended November 2, 2024 compared with the three and nine months ended October 28, 2023:
|
|
(unaudited) |
|
|||||||||||||
|
|
|
|
|||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, |
|
|
October 28, |
|
|
November 2, |
|
|
October 28, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Reconciliation of net income to Adjusted EBIT and Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
90,597 |
|
|
$ |
48,551 |
|
|
$ |
242,871 |
|
|
$ |
112,191 |
|
Interest expense |
|
|
17,769 |
|
|
|
19,680 |
|
|
|
51,000 |
|
|
|
58,570 |
|
Interest income |
|
|
(6,951 |
) |
|
|
(5,328 |
) |
|
|
(21,151 |
) |
|
|
(14,902 |
) |
Net favorable lease costs (a) |
|
|
2,851 |
|
|
|
3,788 |
|
|
|
8,959 |
|
|
|
11,830 |
|
Loss on extinguishment of debt (b) |
|
|
1,412 |
|
|
|
13,630 |
|
|
|
1,412 |
|
|
|
38,274 |
|
Costs related to debt amendments (c) |
|
|
4,553 |
|
|
|
— |
|
|
|
4,553 |
|
|
|
97 |
|
Impairment charges - long-lived assets |
|
|
3,044 |
|
|
|
814 |
|
|
|
11,254 |
|
|
|
6,367 |
|
Litigation matters (d) |
|
|
600 |
|
|
|
— |
|
|
|
2,525 |
|
|
|
1,500 |
|
Income tax expense |
|
|
27,441 |
|
|
|
18,341 |
|
|
|
84,473 |
|
|
|
40,013 |
|
Adjusted EBIT |
|
|
141,316 |
|
|
|
99,476 |
|
|
|
385,896 |
|
|
|
253,940 |
|
Depreciation and amortization |
|
|
87,470 |
|
|
|
76,087 |
|
|
|
256,094 |
|
|
|
219,749 |
|
Adjusted EBITDA |
|
$ |
228,786 |
|
|
$ |
175,563 |
|
|
$ |
641,990 |
|
|
$ |
473,689 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comparable Store Sales. Comparable store sales measure performance of a store during the current reporting period against the performance of the same store in the corresponding period of a prior year. The method of calculating comparable store sales varies across the retail industry. As a result, our definition of comparable store sales may differ from other retailers.
We define comparable store sales as merchandise sales of those stores commencing on the first day of the fiscal month one year after the end of their grand opening activities, which normally conclude within the first two months of operations. If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable store sales for any such month, as well as during the month(s) of their grand re-opening activities. To account for the shift in weeks from the 53rd week of Fiscal 2023, comparable store sales for three month period ended November 2, 2024 and the nine month period ended November 2, 2024 are comparing the 13 and 39 weeks ended November 2, 2024, to the 13 and 39 weeks ended November 4, 2023, respectively. The change in our comparable store sales was as follows:
|
|
Three Months Ended |
|
Nine Months Ended |
November 2, 2024 |
|
1% |
|
2% |
October 28, 2023 |
|
6% |
|
5% |
Various factors affect comparable store sales, including, but not limited to, weather conditions, current economic conditions, the timing of our releases of new merchandise and promotional events, the general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, competition, and the success of marketing programs.
Gross Margin. Gross margin is the difference between net sales and the cost of sales. Our cost of sales and gross margin may not be comparable to those of other entities, since some entities may include all of the costs related to their buying and distribution functions, certain store-related costs and other costs, in cost of sales. We include certain of these costs in the line items “Selling, general and administrative expenses” and “Depreciation and amortization” in our Condensed Consolidated Statements of Income. We
26
include in our “Cost of sales” line item all costs of merchandise (net of purchase discounts and certain vendor allowances), inbound freight, distribution center outbound freight and certain merchandise acquisition costs, primarily commissions and import fees.
Gross margin as a percentage of net sales increased to 43.9% during the three month period ended November 2, 2024, compared with 43.2% during three month period ended October 28, 2023, driven primarily by lower markdowns and higher markups, as well as improved freight expense. Gross margin as a percentage of net sales increased to 43.4% during the nine months ended November 2, 2024, compared with 42.4% during the nine months ended October 28, 2023, driven primarily by lower markdowns, as well as decreased freight costs and higher markups.
Product sourcing costs, which are included in selling, general and administrative expenses, decreased approximately 50 basis points as a percentage of net sales during the three month period ended November 2, 2024, compared with the three month period ended October 28, 2023, primarily driven by supply chain efficiency initiatives. Product sourcing costs decreased approximately 70 basis points as a percentage of net sales during the nine months ended November 2, 2024, compared with the nine months ended October 28, 2023, primarily driven by supply chain efficiency initiatives. Product sourcing costs include the costs of processing goods through our supply chain and buying costs.
Inventory. Inventory at November 2, 2024 increased to $1,440.7 million compared with $1,329.1 million at October 28, 2023. The increase was attributable primarily to 126 net new stores opened since the end of the third quarter of Fiscal 2023 and an increase in reserve inventory, partially offset by a decrease in comparable store inventory.
Reserve inventory includes all inventory that is being stored for release either later in the season, or in a subsequent season. We intend to use our reserve merchandise to effectively chase sales trends.
In order to better serve our customers and maximize sales, we continue to refine our merchandising mix and inventory levels within our stores. By appropriately managing our inventories, we believe we will be better able to deliver a continual flow of fresh merchandise to our customers.
Liquidity. Liquidity measures our ability to generate cash. Management measures liquidity through cash flow, which is the measure of cash generated from or used in operating, financing, and investing activities. Cash and cash equivalents decreased $67.6 million during the nine months ended November 2, 2024, compared with a decrease of $263.3 million during the nine months ended October 28, 2023. Refer to the section below entitled “Liquidity and Capital Resources” for further explanation.
Results of Operations
The following table sets forth certain items in the Condensed Consolidated Statements of Income as a percentage of net sales for the three and nine months ended November 2, 2024 and the three and nine months ended October 28, 2023.
|
|
Percentage of Net Sales |
|
|||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, |
|
|
October 28, |
|
|
November 2, |
|
|
October 28, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Other revenue |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
Total revenue |
|
|
100.2 |
|
|
|
100.2 |
|
|
|
100.2 |
|
|
|
100.2 |
|
Cost of sales |
|
|
56.1 |
|
|
|
56.8 |
|
|
|
56.6 |
|
|
|
57.6 |
|
Selling, general and administrative expenses |
|
|
35.4 |
|
|
|
36.2 |
|
|
|
35.2 |
|
|
|
35.8 |
|
Costs related to debt amendments |
|
|
0.2 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.0 |
|
Depreciation and amortization |
|
|
3.5 |
|
|
|
3.3 |
|
|
|
3.5 |
|
|
|
3.3 |
|
Impairment charges - long-lived assets |
|
|
0.1 |
|
|
|
0.0 |
|
|
|
0.2 |
|
|
|
0.1 |
|
Other income - net |
|
|
(0.5 |
) |
|
|
(0.5 |
) |
|
|
(0.5 |
) |
|
|
(0.4 |
) |
Loss on extinguishment of debt |
|
|
0.1 |
|
|
|
0.6 |
|
|
|
0.0 |
|
|
|
0.6 |
|
Interest expense |
|
|
0.7 |
|
|
|
0.9 |
|
|
|
0.7 |
|
|
|
0.9 |
|
Total costs and expenses |
|
|
95.6 |
|
|
|
97.3 |
|
|
|
95.8 |
|
|
|
97.9 |
|
Income before income tax expense |
|
|
4.6 |
|
|
|
2.9 |
|
|
|
4.4 |
|
|
|
2.3 |
|
Income tax expense |
|
|
1.1 |
|
|
|
0.8 |
|
|
|
1.2 |
|
|
|
0.6 |
|
Net income |
|
|
3.5 |
% |
|
|
2.1 |
% |
|
|
3.2 |
% |
|
|
1.7 |
% |
27
Three Month Period Ended November 2, 2024 Compared With the Three Month Period Ended October 28, 2023
Net sales
Net sales improved approximately $241.5 million, or 10.6%, to $2,526.2 million during the third quarter of Fiscal 2024, primarily driven by the net sales of 126 net new stores since the end of the third quarter of Fiscal 2023, as well as an increase of 1% in comparable stores sales during the third quarter of Fiscal 2024.
Cost of sales
Cost of sales as a percentage of net sales decreased to 56.1% during the third quarter of Fiscal 2024, compared to 56.8% during the third quarter of Fiscal 2023. This decrease was primarily driven by improved markdowns, freight expense, and initial markups. On a dollar basis, cost of sales increased $120.3 million, or 9.3%, primarily driven by our overall increase in sales.
Selling, general and administrative expenses
Selling, general and administrative expenses as a percentage of net sales decreased to 35.4% during the third quarter of Fiscal 2024, compared to 36.2% during the third quarter of Fiscal 2023. The decrease was primarily driven by an improvement in product sourcing costs, resulting from supply chain efficiency initiatives, as well as the impact of purchased Bed, Bath & Beyond leases on occupancy costs in Fiscal 2023.
During Fiscal 2023, we acquired 64 store leases directly from Bed, Bath & Beyond. We started paying rent immediately upon acquisition for all of the stores. We opened 32 of these stores during Fiscal 2023, 20 during the first quarter of Fiscal 2024, 11 during the second quarter of Fiscal 2024, and the remaining store during the third quarter of Fiscal 2024. This transaction resulted in $9.6 million of selling, general and administrative expenses during the third quarter of Fiscal 2023. There were no incremental costs related to acquired Bed, Bath & Beyond leases during the third quarter of Fiscal 2024.
On a dollar basis, selling, general and administrative expenses increased by $66.3 million, or 8.0%, to $893.1 million during the third quarter of Fiscal 2024. The increase was primarily driven by our 126 net new stores opened since the end of the third quarter of Fiscal 2023.
Depreciation and amortization
Depreciation and amortization expense amounted to $87.5 million during the third quarter of Fiscal 2024 compared with $76.1 million during the third quarter of Fiscal 2023. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to new and non-comparable stores, as well as our supply chain initiatives.
Impairment charges – long-lived assets
Impairment charges on long-lived assets were $3.0 million during the third quarter of Fiscal 2024, primarily related to two stores relocated and closed before the end of the respective lease-end dates. Impairment charges on long-lived assets were $0.8 million during the third quarter of Fiscal 2023, related to unrecoverable fixed assets at eight underperforming stores.
The recoverability assessment related to these store-level assets requires various judgments and estimates, including estimates related to future revenues, gross margin rates, store expenses and other assumptions. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current market conditions. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections for each store. Refer to Note 6, “Fair Value Measurements,” for further discussion regarding impairment charges.
Loss on Extinguishment of Debt
During the third quarter of Fiscal 2024, debt extinguishment charges amounted to $1.4 million related to the partial write-off of the original issue discount and deferred debt costs, as a result of the September 2024 upsize and extension of our Term Loan Facility. During the third quarter of Fiscal 2023, we entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $241.2 million in aggregate principal amount of 2025 Convertible Notes held by them for $255.0 million in aggregate principal amount of 1.25% Convertible Senior Notes due 2027 (2027 Convertible Notes). These exchanges resulted in aggregate pre-tax debt extinguishment charges of $13.6 million.
28
Interest expense
Interest expense improved $1.9 million during the third quarter of Fiscal 2024 to $17.8 million, compared to the same period in the prior year. This improvement was primarily driven by a reduction in interest expense related to accumulated other comprehensive income on our previous interest rate swap, which was fully amortized as of the end of Fiscal 2023. Additionally, we had a lower interest rate on the 2027 Convertible Notes compared to the 2025 Convertible Notes that were extinguished, partially offset by a higher average balance of the Term Loan Facility due to the September 2024 extension and upsize of the Term Loan Facility during Q3 2024.
The average interest rate on the Term Loan Facility was 7.0% and 7.4% for the third quarter of Fiscal 2024 and the third quarter of Fiscal 2023, respectively. The average balance on the Term Loan Facility, excluding the original issue discount, was $1,068.6 million and $941.4 million for the third quarter of Fiscal 2024 and the third quarter of Fiscal 2023, respectively.
Income tax expense
Income tax expense was $27.4 million during the third quarter of Fiscal 2024 compared with income tax expense of $18.3 million during the third quarter of Fiscal 2023. The effective tax rate for the third quarter of Fiscal 2024 was 23.2% compared with 27.4% during the third quarter of Fiscal 2023. The increase in income tax expense is due to higher pre-tax income. The higher tax rate in the prior period is primarily attributable to the disallowance of certain debt extinguishment costs related to the partial repurchase of the 2025 Convertible Notes and higher tax expense from stock-based compensation.
At the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. Use of this methodology during the third quarter of Fiscal 2024 resulted in an annual effective income tax rate of approximately 26% (before discrete items) as our best estimate.
Net income
We earned net income of $90.6 million for the third quarter of Fiscal 2024 compared with $48.6 million for the third quarter of Fiscal 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate. Net income included $7.0 million of expense, net of income taxes, for the third quarter of Fiscal 2023 related to the leases acquired from Bed Bath & Beyond.
Nine Month Period Ended November 2, 2024 Compared With the Nine Month Period Ended October 28, 2023
Net sales
Net sales improved approximately $756.8 million, or 11.5%, to $7,344.7 million during the nine month period ended November 2, 2024, primarily driven by the net sales of 126 net new stores opened since the end of the third quarter of Fiscal 2023, as well as an increase of 2% in comparable stores sales during the nine month period ended November 2, 2024.
Cost of sales
Cost of sales as a percentage of net sales decreased to 56.6% during the nine month period ended November 2, 2024, compared to 57.6% during the nine month period ended October 28, 2023. This decrease was primarily driven by decreased markdowns, as well as lower freight costs and higher initial markups. On a dollar basis, cost of sales increased $361.3 million, or 9.5%, primarily driven by our overall increase in sales.
Selling, general and administrative expenses
Selling, general and administrative expenses as a percentage of net sales decreased to 35.2% during the nine month period ended November 2, 2024, compared to 35.8% during the nine month period ended October 28, 2023. The decrease was primarily driven by an improvement in product sourcing costs, resulting from supply chain efficiency initiatives, partially offset by investments in store payroll costs. On a dollar basis, selling, general and administrative expenses increased by $224.6 million, or 9.5%, to $2,582.3 million during the nine month period ended November 2, 2024. The increase was primarily driven by our 126 net new stores opened since the end of the third quarter of Fiscal 2023.
Our acquisition of the Bed, Bath & Beyond store leases resulted in $9.4 million and $12.3 million of selling, general and administrative expenses during the nine month period ended November 2, 2024 and the nine month period ended October 28, 2023, respectively.
29
Depreciation and amortization
Depreciation and amortization expense amounted to $256.1 million during the nine month period ended November 2, 2024 compared with $219.7 million during the nine month period ended October 28, 2023. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to new and non-comparable stores, as well as our supply chain initiatives.
Impairment charges – long-lived assets
Impairment charges on long-lived assets were $11.3 million during the nine month period ended November 2, 2024, related to one owned store selling below carrying value in a sale-leaseback transaction and two stores relocating and planned to close before the end of the respective lease-end dates. Impairment charges on long-lived assets were $6.4 million during the nine month period ended October 28, 2023, related to unrecoverable fixed assets at 11 underperforming stores and unrecoverable lease assets at three of those stores.
The recoverability assessment related to these store-level assets requires various judgments and estimates, including estimates related to future revenues, gross margin rates, store expenses and other assumptions. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current market conditions. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections for each store. Refer to Note 6, “Fair Value Measurements,” for further discussion regarding impairment charges.
Loss on Extinguishment of Debt
During the nine month period ended November 2, 2024, debt extinguishment charges amounted to $1.4 million related to the partial write-off of the original issue discount and deferred debt costs, as a result of the September 2024 extension and upsize of our Term Loan Facility. During the nine month period ended October 28, 2023, we entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes, whereby the holders exchanged $241.2 million in aggregate principal amount of 2025 Convertible Notes held by them for $255.0 million in aggregate principal amount of 2027 Convertible Notes, as well as $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for $133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $38.3 million.
Interest expense
Interest expense improved $7.6 million during the nine month period ended November 2, 2024 to $51.0 million, compared to the same period in the prior year. This improvement was primarily driven by a reduction in interest expense related to accumulated other comprehensive income on our previous interest rate swap, which was fully amortized as of the end of Fiscal 2023. Additionally, we had a lower average balance of 2025 Convertible Notes, and a lower interest rate on the 2027 Convertible Notes compared to the 2025 Convertible Notes that were extinguished, partially offset by a higher average balance due to the September 2024 extension and upsize of the Term Loan Facility during Q3 2024, as well as a higher interest rate on the unhedged portion of the Term Loan Facility.
The average interest rate on the Term Loan Facility was 7.3% and 7.1% for the nine month period ended November 2, 2024 and the nine month period ended October 28, 2023, respectively. The average balance on the Term Loan Facility, excluding the original issue discount, was $979.7 million and $943.8 million for the nine month period ended November 2, 2024 and the nine month period ended October 28, 2023, respectively.
Income tax expense
Income tax expense was $84.5 million during the nine month period ended November 2, 2024 compared with income tax expense of $40.0 million during the nine month period ended October 28, 2023. The effective tax rate for the nine month period ended November 2, 2024 was 25.8% compared with 26.3% during the nine month period ended October 28, 2023. The increase in income tax expense is due to higher pre-tax income. The higher tax rate in the prior period is primarily attributable to the disallowance of certain debt extinguishment costs related to the partial repurchase of the 2025 Convertible Notes.
At the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. Use of this methodology during the nine month period ended November 2, 2024 resulted in an annual effective income tax rate of approximately 26% (before discrete items) as our best estimate.
30
Net income
We earned net income of $242.9 million for the nine month period ended November 2, 2024 compared with $112.2 million for the nine month period ended October 28, 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate. Net income included $6.8 million and $9.1 million of expense, net of income taxes, for the nine month period ended November 2, 2024 and the nine month period ended October 28, 2023, respectively, related to the leases acquired from Bed Bath & Beyond.
Liquidity and Capital Resources
Our ability to satisfy interest payment and future principal payment obligations on our outstanding debt will depend largely on our future performance which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control. If we do not have sufficient cash flow to service interest payment and future principal payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot be assured that any replacement borrowing or equity financing could be successfully completed on terms similar to our current financing agreements, or at all.
We believe that cash generated from operations, along with our existing cash and our ABL Line of Credit, will be sufficient to fund our expected cash flow requirements and planned capital expenditures for at least the next twelve months as well as the foreseeable future. However, there can be no assurance that we would be able to offset declines in our comparable store sales with savings initiatives.
As market conditions warrant, we may, from time to time, repurchase our outstanding debt securities in the open market, in privately negotiated transactions, by tender offer, by exchange transaction or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity and other factors and may be commenced or suspended at any time. The amounts involved and total consideration paid may be material.
From time to time, we evaluate options to opportunistically increase, refinance or extend our debt. Our assessment will be based on our capital needs for, among other things, facility capital improvements and expenditures. No assurance can be given that we will enter into such agreements.
Cash Flow for the Nine Month Period Ended November 2, 2024 Compared With the Nine Month Period Ended October 28, 2023
We used $67.6 million of cash during the nine month period ended November 2, 2024 compared with a use of $263.3 million during the nine month period ended October 28, 2023.
Net cash provided by operating activities amounted to $320.2 million during the nine month period ended November 2, 2024, compared with $270.2 million during the nine month period ended October 28, 2023. The increase in our operating cash flows was primarily driven by improved sales and gross margin, as well as the impact of changes in working capital.
Net cash used in investing activities was $535.9 million during the nine month period ended November 2, 2024 compared with $311.3 million during the nine month period ended October 28, 2023. This change was primarily the result of an increase in capital expenditures related to increased store openings as well as supply chain initiatives.
Net cash provided by financing activities was $148.1 million during the nine month period ended November 2, 2024 compared with net cash used of $222.3 million during the nine month period ended October 28, 2023. This change was primarily driven by the September 2024 extension and upsizing of the Term Loan Facility during the third quarter of Fiscal 2024 as well as net payment on the Convertible Notes during Fiscal 2023, partially offset by increased repurchases of shares of our common stock under our share repurchase program in Fiscal 2024.
Changes in working capital also impact our cash flows. Working capital equals current assets minus current liabilities. We had working capital at November 2, 2024 of $389.0 million compared with $260.3 million at October 28, 2023. The increase in working capital was primarily due to an increased cash balance, increased inventory, and increased prepaid assets, partially offset by increased accounts payable and increased current maturities of long term debt related to the 2025 Convertible Notes. We had working capital at February 3, 2024 of $298.2 million.
Capital Expenditures
For the nine month period ended November 2, 2024, capital expenditures, net of $9.3 million of landlord allowances, amounted to $500.6 million (inclusive of accrued capital expenditures).
31
We estimate that we will spend approximately $750 million, net of approximately $40 million of landlord allowances, in capital expenditures during Fiscal 2024, including approximately $340 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures). In addition, we estimate that we will spend approximately $210 million to support our supply chain initiatives, with the remaining capital used to support our information technology and other business initiatives.
Share Repurchase Program
On August 15, 2023, our Board of Directors authorized the repurchase of up to $500 million of common stock, which is authorized to be executed through August 2025.
During the nine month period ended November 2, 2024, we repurchased 795,118 shares of common stock for $180.5 million under these repurchase programs. As of November 2, 2024, we had $324.6 million remaining under our share repurchase authorization.
We are authorized to repurchase shares of our outstanding common stock from time to time on the open market or in privately negotiated transactions under our repurchase program. The timing and amount of stock repurchases will depend on a variety of factors, including the market conditions as well as corporate and regulatory considerations. Our share repurchase program may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our common stock under the program.
Dividends
We currently do, and intend to continue to, retain all available funds and any future earnings to fund all of the Company's capital expenditures, business initiatives, and to support any potential opportunistic capital structure initiatives. Therefore, at this time, we do not anticipate paying cash dividends in the near term. Our ability to pay dividends on our common stock will be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions under the terms of current and any future agreements governing our indebtedness. Any future determination to pay dividends will be at the discretion of our Board of Directors, subject to compliance with covenants in our current and future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements and other factors that our Board of Directors deems relevant.
In addition, since we are a holding company, substantially all of the assets shown on our Condensed Consolidated Balance Sheets are held by our subsidiaries. Accordingly, our earnings, cash flow and ability to pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends.
Operational Growth
During the nine month period ended November 2, 2024, we opened 139 new stores, inclusive of 30 relocations, and closed 13 stores, exclusive of the aforementioned relocations, bringing our store count as of November 2, 2024 to 1,103 stores. During Fiscal 2024, we plan to open 101 net new stores.
Debt and Hedging
As of November 2, 2024, our obligations, inclusive of original issue discount, include $1,241.7 million under our Term Loan Facility, $453.2 million of Convertible Notes and no outstanding borrowings on our ABL Line of Credit. Our debt obligations also include $25.5 million of finance lease obligations as of November 2, 2024.
Term Loan Facility
BCFWC and certain of its subsidiaries and holding companies are party to a Credit Agreement (as amended, supplemented and otherwise modified, the Term Loan Facility) that provides for term loans in an aggregate principal amount as of November 2, 2024 of $1,250 million maturing on September 24, 2031.
On September 24, 2024, we entered into an amendment to the Term Loan Facility dated as of February 24, 2011 (the "Amendment"), which among other things, (i) refinanced the outstanding $933 million principal amount of Term B-6 Loans with Term B-7 Loans in an aggregate principal amount of $1,250 million, which includes incremental term loans in an aggregate principal amount of $317 million, (ii) extended the maturity date from June 24, 2028 to September 24, 2031, and (iii) reduced the interest rate margins applicable to our term loan facility from 1.00% to 0.75%, in the case of prime rate loans, and from 2.00% to 1.75%, in the
32
case of SOFR loans, with a 0.00% SOFR floor, and removed the SOFR adjustment. The Term B-7 Loans were issued with an original issue discount of 99.5.
At November 2, 2024, our borrowing rate related to the Term Loan Facility was 6.4%.
ABL Line of Credit
BCFWC and certain of its subsidiaries and holding companies are party to a Second Amended and Restated Credit Agreement (as amended, supplemented and otherwise modified, the ABL Line of Credit) that provides for $900.0 million of revolving commitments (subject to a borrowing base limitation) maturing on December 22, 2026, and, subject to the satisfaction of certain conditions, BCFWC can increase the aggregate amount of commitments up to $1,200 million. The interest rate margin applicable under the ABL Line of Credit is 1.125% to 1.375% in the case of a daily Secured Overnight Financing Rate (SOFR) rate or a term SOFR rate (in each case, plus a credit spread adjustment of 0.10%), and 0.125% to 0.375% in the case of a prime rate, depending on the average daily availability of the lesser of (a) the total commitments or (b) the borrowing base. The ABL Line of Credit is collateralized by a first priority lien on BCFWC’s and each guarantor's inventory, receivables, bank accounts, and certain related assets and proceeds thereof (subject to certain exceptions), and a second priority lien on BCFWC’s and each guarantor's other assets and proceeds thereof (other than real estate and subject to certain exceptions).
On June 26, 2023, BCFWC entered into a Fifth Amendment to the Second Amended and Restated Credit Agreement, which increased the sublimit for letters of credit thereunder from $150 million to $250 million. The letter of credit sublimit was automatically reduced to $225 million on July 1, 2024, and $212.5 million on October 1, 2024, and will be automatically reduced to $200 million on January 1, 2025.
At November 2, 2024, we had $847.5 million available under the ABL Line of Credit. There were no borrowings on the ABL Line of Credit during the nine month period ended November 2, 2024.
2025 Convertible Notes
On April 16, 2020, we issued $805.0 million of 2025 Convertible Notes. The 2025 Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $220.18 per share of the Company’s common stock), subject to adjustment if certain events occur.
The 2025 Convertible Notes are general unsecured obligations of the Company. The 2025 Convertible Notes bear interest at a rate of 2.25% per year, payable semi-annually in cash, in arrears on April 15 and October 15 of each year, beginning on October 15, 2020. The 2025 Convertible Notes will mature on April 15, 2025, unless earlier converted, redeemed or repurchased.
During the first quarter of Fiscal 2023, we entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for $133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $24.6 million.
Prior to the close of business on the business day immediately preceding January 15, 2025, the 2025 Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods. Thereafter, the 2025 Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2025 Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $220.18 per share of our common stock), subject to adjustment if certain events occur. The initial conversion price represents a conversion premium of approximately 32.50% over $166.17 per share, the last reported sale price of our common stock on April 13, 2020 (the pricing date of the offering) on the New York Stock Exchange. During the first quarter of Fiscal 2021, the Company made an irrevocable settlement election for any conversions of the 2025 Convertible Notes. Upon conversion, we will pay cash for the principal amount. For any excess above principal, we will deliver shares of its common stock. We were not permitted to redeem the 2025 Convertible Notes prior to April 15, 2023. From and after April 15, 2023, we are able to redeem for cash all or any portion of the 2025 Convertible Notes, at its option, if the last reported sale price of the Company’s common stock is equal to or greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the principal aggregate amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
Holders of the 2025 Convertible Notes may require us to repurchase their 2025 Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the 2025 Convertible Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if we issue a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their 2025 Convertible Notes in connection with such corporate event or during the relevant redemption period for such 2025 Convertible Notes.
33
2027 Convertible Notes
On September 12, 2023, we closed the issuance of approximately $297.1 million aggregate principal amount of our 2027 Convertible Notes pursuant to separate, privately negotiated exchange and subscription agreements with a limited number of holders of our 2025 Convertible Notes and certain investors, in each case pursuant to exemptions from registration under the Securities Act of 1933. We exchanged approximately $241.2 million in aggregate principal amount of the 2025 Convertible Notes for approximately $255.0 million in aggregate principal amount of the 2027 Convertible Notes. We also issued approximately $42.1 million in aggregate principal amount of 2027 Convertible Notes in a private placement to certain investors. An aggregate of up to 1,422,568 shares of common stock may be issued upon conversion of the 2027 Convertible Notes, which number is subject to adjustment up to an aggregate of 1,911,372 shares following certain corporate events that occur prior to the maturity date or if we issue a notice of redemption, and which is also subject to certain anti-dilution adjustments.
The 2027 Convertible Notes will bear interest at a rate of 1.25% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. The 2027 Convertible Notes will mature on December 15, 2027, unless earlier converted, redeemed or repurchased.
Prior to the close of business on the business day immediately preceding September 15, 2027, the 2027 Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods. Thereafter, the 2027 Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2027 Convertible Notes have an initial conversion rate of 4.8560 shares per $1,000 principal amount of 2027 Convertible Notes (equivalent to an initial conversion price of approximately $205.93 per share of our common stock), subject to adjustment if certain events occur. The initial conversion price represents a conversion premium of approximately 32.50% over $155.42 per share, the last reported sale price of our common stock on September 7, 2023 on The New York Stock Exchange. Upon conversion, we will pay cash up to the aggregate principal amount of 2027 Convertible Notes being converted, and pay (and deliver, if applicable) cash, shares of our common stock or a combination thereof, at its election, in respect of the remainder (if any) of our conversion obligation in excess of such aggregate principal amount. We will not be able to redeem the 2027 Convertible Notes prior to December 20, 2025. On or after December 20, 2025 and prior to the 21st scheduled trading day immediately preceding December 15, 2027, we will be able to redeem for cash all or any portion of the 2027 Convertible Notes, at its option, if the last reported sale price of our common stock is equal to or greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the aggregate principal amount of the 2027 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
If we undergo a fundamental change, subject to certain conditions, holders of the 2027 Convertible Notes may require us to repurchase for cash all or any portion of our 2027 New Convertible Notes. The fundamental change repurchase price will be 100% of the aggregate principal amount of the 2027 Convertible Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
Hedging
We have interest rate swaps which hedge $800 million of variable rate exposure under our Term Loan Facility. The interest rate swaps are designated as cash flow hedges and expire on September 24, 2031. Refer to Note 5, “Derivative Instruments and Hedging Activities,” for further discussion regarding our derivative transactions.
Certain Information Concerning Contractual Obligations
We had $1,747.7 million of purchase commitments related to goods that were not received as of November 2, 2024, and had $4,465.9 million of future minimum lease payments under operating leases as of November 2, 2024.
See Note 4, “Long Term Debt" for additional information related to our debt transactions. There were no other significant changes regarding our obligations to make future payments under current contracts from those included in our Fiscal 2023 10-K.
34
Critical Accounting Policies and Estimates
Our Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. We believe there are several accounting policies that are critical to understanding our historical and future performance as these policies affect the reported amounts of revenues and other significant areas that involve management’s judgments and estimates. The preparation of our Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities; (ii) the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements; and (iii) the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, inventories, long-lived assets, intangible assets, goodwill, insurance reserves, leases and income taxes. Historical experience and various other factors that are believed to be reasonable under the circumstances form the basis for making estimates and judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. A critical accounting estimate meets two criteria: (1) it requires assumptions about highly uncertain matters and (2) there would be a material effect on the Condensed Consolidated Financial Statements from either using a different, although reasonable, amount within the range of the estimate in the current period or from reasonably likely period-to-period changes in the estimate.
Our critical accounting policies and estimates are consistent with those disclosed in Note 1, “Summary of Significant Accounting Policies,” to the audited Consolidated Financial Statements, included in Part II, Item 8 of the Fiscal 2023 10-K.
Safe Harbor Statement
This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, the industry in which we operate and other matters, as well as management’s beliefs and assumptions and other statements regarding matters that are not historical facts. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Such statements may include, but are not limited to, future impacts of current macroeconomic conditions, proposed store openings and closings, proposed capital expenditures, ongoing strategic initiatives and the intended results of those initiatives, future performance or results, the effect of the adoption of recent accounting pronouncements on our consolidated financial position, results of operations and cash flows, and the outcome of contingencies such as legal proceedings. Our forward-looking statements are subject to risks and uncertainties. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual events or results to differ materially from those we expected include: general economic conditions, such as inflation, and the domestic and international political situation and the related impact on consumer confidence and spending; competitive factors, including the scale and potential consolidation of some of our competitors, rise of e-commerce spending, pricing and promotional activities of major competitors, and an increase in competition within the markets in which we compete; seasonal fluctuations in our net sales, operating income and inventory levels; the reduction in traffic to, or the closing of, the other destination retailers in the shopping areas where our stores are located; our ability to identify changing consumer preferences and demand; our ability to meet our environmental, social or governance (“ESG”) goals or otherwise expectations of our stakeholders with respect to ESG matters; extreme and/or unseasonable weather conditions caused by climate change or otherwise adversely impacting demand; effects of public health crises, epidemics or pandemics; our ability to sustain our growth plans or successfully implement our long-range strategic plans; our ability to execute our opportunistic buying and inventory management process; our ability to optimize our existing stores or maintain favorable lease terms; the availability, selection and purchasing of attractive brand name merchandise on favorable terms; our ability to attract, train and retain quality employees and temporary personnel in sufficient numbers; labor costs and our ability to manage a large workforce; the solvency of parties with whom we do business and their willingness to perform their obligations to us; import risks, including tax and trade policies, tariffs and government regulations; disruption in our distribution network; our ability to protect our protect our information systems against service interruption, misappropriation of data, breaches of security, or other cyber-related attacks; risks related to the methods of payment we accept; the success of our advertising and marketing programs in generating sufficient levels of customer traffic and awareness; damage to our corporate reputation or brand; impact of potential loss of executives or other key personnel; our ability to comply with existing and changing laws, rules, regulations and local codes; lack of or insufficient insurance coverage; issues with merchandise safety and shrinkage; our ability to comply with increasingly rigorous privacy and data security regulations; impact of legal and regulatory proceedings relating to us; use of social media by us or by third parties our direction in violation of applicable laws and regulations; our ability to generate sufficient cash to fund our operations and service our debt obligations; our ability to comply with covenants in our debt agreements; the consequences of the possible conversion of our convertible notes; our reliance on dividends, distributions and other payments, advance and transfers of funds from our subsidiaries to meet our obligations; the volatility of our stock price; the impact of the anti-takeover provisions in our governing
35
documents; impact of potential shareholder activism and other risks discussed from time to time in our filings with the Securities and Exchange Commission (SEC), including those under the heading “Risk Factors” in the Fiscal 2023 10-K.
Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law, even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.
Recent Accounting Pronouncements
Refer to Note 1, “Summary of Significant Accounting Policies,” to our Condensed Consolidated Financial Statements in Part I, Item 1 for a discussion of recent accounting pronouncements and their impact on our Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
On September 24, 2024, the Company entered into an amendment to the Credit Agreement dated as of February 24, 2011, which among other things, (i) refinanced the outstanding $933 million principal amount of term B-6 loans with term B-7 loans in an aggregate principal amount of $1,250 million, which includes incremental term loans in an aggregate principal amount of $317 million, (ii) extended the maturity date from June 24, 2028 to September 24, 2031, and (iii) reduced the interest rate margins applicable to the Company’s term loan facility from 1.00% to 0.75%, in the case of prime rate loans, and from 2.00% to 1.75%, in the case of SOFR loans, with a 0.00% SOFR floor, and removing the SOFR adjustment.
Additionally, on September 27, 2024, the Company terminated the previous $450 million interest rate swap, and entered into a new interest rate swap in the notional amount of $500 million with a blended interest rate of 2.83%. On this same date, the Company also entered into a new interest rate swap for $300 million with an interest rate of 3.37%.
There were no other material changes to our quantitative and qualitative disclosures about market risk from those included in the Fiscal 2023 10-K.
Item 4. Controls and Procedures.
Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of the last day of the fiscal period covered by this report, November 2, 2024. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of November 2, 2024.
During the quarter ended November 2, 2024, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
36
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
In the course of business, the Company is party to class or collective actions alleging violations of federal and state wage and hour and other labor statutes, representative claims under the California Private Attorneys’ General Act and various other lawsuits and regulatory proceedings from time to time including, among others, commercial, product, employee, customer, intellectual property and other claims. Actions against us are in various procedural stages. Many of these proceedings raise factual and legal issues and are subject to uncertainties. Refer to Note 11, "Commitments and Contingencies," to our Condensed Consolidated Financial Statements for further detail.
Item 1A. Risk Factors.
There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Fiscal 2023 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table provides information regarding our purchases of common stock during the three fiscal months ended November 2, 2024:
Month |
|
Total Number |
|
|
Average Price |
|
|
Total Number |
|
|
Approximate |
|
||||
August 4, 2024 through August 31, 2024 |
|
|
38,743 |
|
|
$ |
260.78 |
|
|
|
38,743 |
|
|
$ |
370,380 |
|
September 1, 2024 through October 5, 2024 |
|
|
131,885 |
|
|
$ |
264.56 |
|
|
|
131,885 |
|
|
$ |
335,488 |
|
October 6, 2024 through November 2, 2024 |
|
|
42,744 |
|
|
$ |
254.18 |
|
|
|
42,744 |
|
|
$ |
324,623 |
|
Total |
|
|
213,372 |
|
|
|
|
|
|
213,372 |
|
|
|
|
||
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three month period ended November 2, 2024, no director or officer of the Company
37
Item 6. Exhibits.
Exhibit |
|
Incorporated by Reference |
|
Number |
Exhibit Description |
Form |
Filing Date |
10.1 |
8-K |
9/26/2024 |
|
31.1† |
|
|
|
31.2† |
|
|
|
32.1† |
|
|
|
32.2† |
|
|
|
101.INS† |
Inline XBRL Instance Document – the instance document does not appear in Interactive Data File, because its XBRL tags are embedded within the Inline XBRL document. |
|
|
101.SCH† |
Inline XBRL Taxonomy Extension Schema Document |
|
|
101.CAL† |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
101.DEF† |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
101.LAB† |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
101.PRE† |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
104† |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
|
† Filed or furnished herewith.
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BURLINGTON STORES, INC. |
|
/s/ Michael O’Sullivan |
Michael O’Sullivan Chief Executive Officer (Principal Executive Officer) |
|
/s/ Kristin Wolfe |
Kristin Wolfe Chief Financial Officer (Principal Financial Officer) |
Date: November 26, 2024
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